How “Smart” Transportation is Transforming Commercial Real Estate
In March 2020, Mass Transit magazine (a business-to-business transit publication) featured a piece that was good news for Central Ohio residents. The article reaffirmed what a growing number of people have come to accept as a matter of course: exciting new transportation initiatives are transforming commercial real estate.
So, what was the good news?
Ridership on the Central Ohio Transportation Authority (COTA) transit system for 2019 was the highest in 31 years, boasting 19.1 million passengers – an increase of 1.2 percent from the year prior. In fact, these numbers surpassed national trends! Ridership gains were most robust for CMAX, COTA’s rapid bus transit line, connecting Westerville to Downtown Columbus, and AirConnect, the system’s seven-day Downtown access to John Glenn International Airport. C-pass, COTA’s free transportation initiative for many downtown employees (also earned honorable mention. (The initiative costs are covered by employers, property owners, and the Mid-Ohio Regional Planning Commission.)
The ridership uptick is more than an encouraging snapshot of Central Ohio transit. It’s a trend unfolding around the world, and it’s having a ripple effect on how we live, work, and play. In the decades ahead, these trends may profoundly alter how and where commercial real estate sets up shop.
That’s because these more traditional mass transit alternatives (buses, commuter rail, light rail, etc.) are coming online, along with a host of other developments. Trending factors include:
- the growth of urban pedestrianization;
- the desire for neighborhood walkability;
- declines in single-ride car trips, as ridesharing proliferates;
- an increase in last-mile transit via electric bike and e-scooter rentals; and
- mixed-use properties (featuring retail, work, entertainment, and dining amenities).
Related Article: Understand the “live-work-play” hybrid with our complete investors guide to mixed-use properties, and discover how the sector has been propelled by better, faster, and more efficient transportation systems.
Buckle Up for Change
For commercial real estate developers, a simple rule is fast emerging: follow the people and provide services that speak to people’s collective needs; doing so will drive commercial real estate values up.
What’s increasingly clear is the change that is underway. There is a shift from a car-dependent hub-and-spoke arrangement of global cities with massive interstate/motorway arteries running through them. Suburbs, and around them in gigantic multilane perimeter roads, are yesterday’s news. Already, according to an influential trend report by the Urban Land Institute and PwC, 80 percent of respondents said mobility changes play a role in their investment-making decisions.
At the granular level, we may need to fundamentally rethink how and where commercial real estate sets up shop. For starters, it might mean:
- Significantly reducing the number of parking spaces dedicated to a building, despite its occupancy capacity.
- Repurposing entire parking garages into mixed-use spaces that include rooftop green space for parks or localized energy production (solar and wind).
- Lower levels could become charging stations for electric bikes and e-scooters, as well as ridesharing drop-off points.
- Dedicating rooftop space for future widespread drone delivery*. Deliveries of the future would be conducted from above, while trucks are only routed to large distribution hubs.
*Already, in the current COVID-19 crisis, drone deliveries are skyrocketing, part of what’s known as the “micro-fulfillment” economy. In the not too distant future, commercial real estate developers would be wise to advertise their “drone acceptance policies.”
Mixed-Use… a Mixed Blessing?
For commercial real estate developers, mixed-use amenities will have to change, too. That’s because as important as access to mass transit and last-mile commuting will be (and providing it will drive value), a growing number of back-to-city Baby Boomers (ages 56-74) and their Millennial children (ages 25-40) are choosing to work from home.
For Boomers nearing retirement, working from home allows for a lower stress employment solution. Or, if they have already retired, part-time work can be done from home, too, as part of a second career. Tech-savvy Millennials, meanwhile, are eager to embrace a more measured work-life balance while lowering their carbon footprint. Due to these generational trends, telecommuting has increased by roughly 115 percent from 2005 to 2015. According to the US Bureau of Labor Statistics, telecommuters make up 16 percent of the US workforce.
As such, a growing number of people ranging from their 20s to their 70s desire walkability in their neighborhoods. Banks, grocery stores, movie theatres, restaurants, bars, office buildings, and entertainment venues must think about these shifting trends. Increasingly, mixed-use buildings must incorporate these amenities in their footprint if they are to attract, retain, and engage a wide swath of the US population. For commercial real estate owners, simply touting your proximity to traditional mass transit may no longer be enough.
The Problem of Prediction
While it’s easy to look back, futurists and historians alike remind us that predictions of what’s to come are always tricky – even when those predictions are based on well-established facts. However, it’s important to note that the smart transportation trends observed in the US and abroad are already occurring. And for the foreseeable future, planning for that smarter, more distributed, greener, cleaner, and more localized city (and suburb) of tomorrow is paramount.
Today, The Robert Weiler Company is at the forefront of urban and suburban transition with the following projects:
- River & Rich: A project that includes 230 residential units and over 25,000 square feet of retail space, seeks to reshape the East Franklinton Creative Arts District. The new urban mixed-use development project consists of a parking structure, as well as an onsite fitness center and pool. River & Rich will be one of many East Franklinton development projects that cater to residents who enjoy an easy walk to Downtown shops and eateries.
- University City Shopping Center: A community mainstay for decades, which was officially demolished in 2018 to make room for a six-story mixed-use development project. The site will feature 266 apartments and over 120,000 square feet of retail space for lease, which will overshadow the one-story building that once housed the landmark Kroger location. Located near Ohio State University, the project will focus on a growing youth population, which includes Millennials and Generation Z.
So, we may not all be clamoring for flying car docking ports at our office buildings or shopping centers. And perhaps the future drone economy may be overpromised as fears of a cluttered airspace mount.
Building Our Transportation Future Through Commercial Real Estate
What is clear is that small stories like the one that splashed on Mass Transit magazine on March 6, and the ripple effect these types of transportation changes herald, are just the beginning. At The Robert Weiler Company, we’re excited about the future of transportation in Columbus, Ohio and beyond. That’s why we’re invested in several developments that will mark a new beginning for our community and commercial real estate.
At The Robert Weiler Company, a full-service commercial real estate and appraisal firm, we’ve been at the forefront of some of the most notable properties in Columbus, OH, and throughout Central Ohio since 1938. Since that time, a lot has changed. Back then, Columbus was home to some 300,000 people. Highway-dependent suburbs and office parks did not yet exist, and the latest in-car innovation from Buick was the car radio.
Consider it “smart” business to plan ahead. Call 614-221-4286 to get expert advice from The Robert Weiler Company, and uncover the perfect commercial real estate investment opportunity for you!